Continental Airlines Plans Debt Sale: New Issue Alert (Correct)

(Corrects company name in third paragraph.)

Continental Airlines Inc., poised to merge with United Airlines to become the world’s biggest carrier, is marketing five-year notes as debt sales surpass $10 billion for the third day in a month.

Continental plans to sell $750 million of senior secured first-lien notes in part to repay bank debt, it said yesterday in a statement distributed by PR Newswire. Companies sold $12 billion of debt yesterday, the most since $12.9 billion on July 21, according to data compiled by Bloomberg. Volume topped $10 billion on July 7 and June 21.

Yesterday’s issuance came as companies take advantage of low rates and investor demand for yield amid modest economic growth expectations. James Barnes, a fixed-income portfolio manager at Wyomissing, Pennsylvania-based National Penn Investors Trust Co., said companies are taking advantage of the “level of comfort investors have for corporate bonds” coupled with tight spreads to low-yielding Treasuries.

“They’re getting financing really cheap -- so cheap it doesn’t matter if they need the money today or not,” said Barnes, who manages $1 billion of investment-grade assets. “It’s an opportunity for corporations to hit the capital markets and raise additional funds and keep them to the side until they actually need them.”

The extra yield investors demand to own investment-grade corporate bonds rather than government debt was unchanged yesterday at 188 basis points, according to Bank of America Merrill Lynch’s Corporate Master index. Absolute yields on the debt rose 6 basis points to 4.06 percent, up from the lowest since March 2004.

IBM Notes

International Business Machines Corp., the world’s biggest computer-services company, led domestic nonfinancial issuance selling $1.5 billion of three-year notes, according to data compiled by Bloomberg. The Armonk, New York-based IBM sold notes that pay 30 basis points more than similar-maturity Treasuries, the data show.

Citigroup Inc. and Credit Suisse Group AG, Switzerland’s second-biggest bank, each tapped the market with multibillion dollar offerings. New York-based Citigroup, the bank 18 percent owned by the U.S. government, sold $3 billion of bonds in a two- part offering, paying a spread of 255 basis points on its 10- year notes.

Credit Suisse sold $2 billion of 10-year notes that pay 145 basis points more than similar-maturity Treasuries.

“You have large corporations that continue to take advantage of the tight spreads and the already low benchmark interest rates,” Barnes said. The 10-year U.S. Treasury yield stayed below 3 percent for a fifth straight day, ending at 2.96 percent.

Junk Spreads

The spread on high-yield, high-risk, or junk debt narrowed 3 basis points to 654 basis points, according to the Bank of America Merrill Lynch U.S. High Yield Master II Index. Yields on the debt rose 2 basis points to 8.53 percent.

Junk debt is rated below Baa3 by Moody’s and lower than BBB- by S&P. A basis point is 0.01 percentage point.

Expedia Inc., the biggest Internet travel agency, was the biggest high-yield borrower yesterday. The Bellevue, Washington- based company sold $750 million of 10-year notes in a boosted offering. The debt pays 300 basis points more than similar- maturity Treasuries, Bloomberg data show.

Continental’s secured notes, rated Ba2 by Moody’s Investors Service and BB- by Standard & Poor’s, will be marketed this week and may price as soon as Aug. 5, according to a person familiar with the Houston-based company’s transaction, who declined to be identified because terms aren’t set.

The airline plans to use about $350 million of proceeds to repay a secured term-loan facility and the remainder for general corporate purposes, it said in the statement.

Following is a description of at least $10.5 billion of pending sales of dollar-denominated bonds in the U.S.

Investment Grade

DOHA BANK QSC, Qatar’s third-largest bank, may raise as much as $1 billion from bond sales, its chief executive officer said. The money is likely to be raised for five years and is meant to “fix the maturity mismatch” on the bank’s balance sheet, Raghavan Seetharaman said in a June 16 telephone interview from Doha. The bank will sell the bonds by the end of this year in both dollars and the local riyal currency, the CEO said in a July 25 interview. The lender said in April that it planned to sell senior notes in dollars in a statement on the Qatari bourse, without disclosing the size of the offering.

FORETHOUGHT FINANCIAL GROUP INC. plans to sell $150 million of 10-year bonds, according to a person familiar with the transaction, who declined to be identified because terms aren’t set. S&P assigned the notes a grade of BBB- in a March 24 report.

Not Rated

ROCK HOLDINGS INC. may sell $300 million of 5-year senior secured notes, according to a person familiar with the transaction, who declined to be identified because the terms aren’t set.

DICK CLARK PRODUCTIONS INC., through its dcp LLC and dcp Corp. units, may sell $150 million of five-year notes, according to a person familiar with the offering. The senior secured notes will be used to refinance the existing senior secured credit facility and fund a distribution to the parent company, said the person, who declined to be identified because terms aren’t set.

METLIFE INC., the largest U.S. life insurer, plans to sell $3.1 billion of senior debt in “varying maturities” after it conducts a stock offering, according to an August 2 regulatory filing. Proceeds will be used to help fund the cash portion of its purchase of Alico, a non-U.S. unit of American International Group Inc., and the notes may have interest rates ranging from 2.9 percent to 6.6 percent, according to the filing. The fixed- or floating-rate debt sale will follow the sale of 75 million shares of common stock, the filing said.

CONTINENTAL AIRLINES INC., poised to merge with United Airlines to become the world’s biggest carrier, may sell $750 million of senior secured notes due 2015, the company said in a statement distributed by PR Newswire. Approximately $350 million of the proceeds will be used to repay an outstanding secured term loan facility and the balance will be used for general corporate purposes.

OAO GAZPROMBANK, the lending unit of Russia’s gas export monopoly, is selling $500 million of bonds due December 2014 that may be priced to yield 6.25 percent to 6.375 percent, according to two people with knowledge of the sale. Barclays Capital, Royal Bank of Scotland Group Plc and UBS AG are managing the sale, which will be issued through GPB Eurobond Finance Plc.

STERICYCLE INC. plans to issue $175 million of 7-year, 3.89 percent notes and $225 million of 10-year, 4.47 percent debt after receiving informal commitments from 22 institutional investors to buy the securities, it said in a statement distributed by Business Wire.

The PROVINCE OF CORDOBA, Argentina, plans to sell as much as $350 million of bonds in international markets once the federal government completes a restructuring of defaulted debt, Banco de Cordoba said. The province hired Citigroup Inc. and UBS AG to arrange an overseas dollar bond sale, said a person familiar with the transaction who declined to be identified because terms aren’t set.

High Yield

STATS CHIPPAC LTD., the provider of semiconductor test and assembly services, plans to sell $600 million of 5-year senior notes, according to a person familiar with the transaction, who declined to be identified because terms aren’t set. Proceeds will help fund a tender offer, Stats Chippac said in a statement distributed by Marketwire.

ENERGYSOLUTIONS INC., the Salt Lake City-based nuclear services company, plans to sell $300 million of senior unsecured notes due 2018, the company said a July 28 statement distributed by Marketwire. The company has amended its credit facilities and plans to refinance them with borrowings under new loans and the offering of senior notes, the company said in a July 13 statement. Standard & Poor’s assigned the proposed debt a rating of BB- on July 15.

MULTIPLAN INC. may sell $650 million to $675 million of bonds to help pay for its acquisition by BC Partners Ltd. and Silver Lake, according to a person familiar with the transaction. The health-care cost management company also seeks a $1.3 billion term loan and a $75 million revolving line of credit, said the person, who declined to be identified because terms aren’t set.

FERRO CORP. plans to sell $250 million of senior notes as it seeks to repurchase outstanding convertible debt due in 2013. The company also is negotiating with lenders to enter into a new credit facility, according to a statement distributed by Business Wire.

KCA DEUTAG DRILLING GROUP LTD., a unit of private-equity investor First Reserve Corp., is planning to sell $500 million of eight-year bonds through Turbo Beta Plc, according to Alex Christou, an Aberdeen, Scotland-based spokesman for the oil- services company. Goldman Sachs Group Inc. is managing the sale with HSBC Holdings Plc, Lloyds TSB Banking Group Plc, Royal Bank of Scotland Group Plc and Natixis, a person with knowledge of the transaction said. The notes may be rated CCC by S&P and Caa2 by Moody’s, according to a statement on the company’s website.

MARINA DISTRICT FINANCE COMPANY INC., owner of the Borgata Hotel Casino & Spa in Atlantic City, plans to sell $725 million of senior secured debt in two parts, according to a person familiar with the transaction. The notes will be due in 2015 and 2018, said the person, who declined to be identified because terms aren’t set. Marina District Finance is Boyd Gaming Corp.’s joint venture with MGM Resorts International. Proceeds will be used to repay bank debt and fund a dividend, the person said.

TRILOGY INTERNATIONAL PARTNERS LLC, the wireless communications provider, plans to sell $370 million of senior secured notes, according to Moody’s Investors Service. Moody’s rated the notes Caa1, it said in a report. Proceeds will be used to refinance debt and finance growth in New Zealand, Moody’s said. S&P rated the debt an equivalent CCC+. The notes will have a maturity of six years, according to a person familiar with the transaction, who declined to be identified because terms aren’t set.

UNIVERSAL HEALTH SERVICES INC., the operator of more than 100 U.S. medical facilities that’s buying Psychiatric Solutions Inc., cut its offering of senior unsecured notes to $250 million, according to a person familiar with the transaction. It increased the size of the term loans it’s seeking by $100 million, said the person, who declined to be identified because terms aren’t set. The King of Prussia, Pennsylvania-based company previously planned to issue $400 million of senior unsecured debt to help finance the acquisition, according to a filing with the Securities and Exchange Commission.

E-LAND FASHION CHINA HOLDINGS LTD, the Hong Kong-based apparel products provider, hired Morgan Stanley to help it sell $200 million of three-year bonds, according to a person familiar with the matter. The company plans to begin meeting with investors in Asia, Europe and the U.S. on July 19, said the person who declined to be identified because terms aren’t set. Moody’s Investors Service assigned the proposed notes a Ba2, citing growing personal consumption in China, E-Land Fashion’s moderate scale and significant business volatility. Proceeds will be used for mainly for capital expenditures and general corporate purposes, Moody’s said in the report.

GENTIVA HEALTH SERVICES INC., the U.S. home-nursing company that is buying Odyssey HealthCare Inc., plans to sell $305 million of eight-year notes, the Atlanta-based company said in a May 24 regulatory filing, without specifying the timing of the transaction. Proceeds will be used to help fund the takeover, according to the filing. Standard & Poor’s assigned the unsecured notes a B- credit rating on June 29. Moody’s Investors Service rated the notes a grade of B2 and ranked $925 million of loans three steps higher at Ba2, it said in a report.

Offerings in Pipeline

RURAL ELECTRIFICATION CORP., India’s state-owned lender to power projects, may sell as much as $300 million of bonds denominated in U.S. dollars, Finance Director Hari Das Khunteta said in a telephone interview. Rural Electrification plans to raise $500 million from debt sales in the period, he had said on April 16.

THE PHILIPPINES hired eight banks to help arrange the sale of 10-year bonds, which may also include five- and seven-year issues, Treasurer Roberto Tan wrote in a mobile-phone message. “There may be appetite for 10-year debt based on feedback we’re receiving from arrangers,” he said. The Philippines is also preparing to seek central bank approval for a planned sale of new dollar-denominated debt to exchange for older, shorter-dated notes, Finance Secretary Cesar Purisima said on August 2. The government will be “opportunistic” in borrowing as it aims to reduce foreign-currency risks and prevent bunching of maturities, the finance chief said.

EMPRESA NACIONAL DEL PETROLEO, Chile’s state-owned oil refiner, hired Bank of America Corp., Banco Bilbao Vizcaya Argentaria SA, BNP Paribas SA and Scotia Capital to arrange meetings with bond investors, according to a person familiar with the matter. The Santiago-based company plans to meet with investors Aug. 2 to Aug. 4, said the person, who declined to be identified because he wasn’t authorized to comment.

UKRAINE may sell bonds in the international capital markets, according to Dragon Capital, the former Soviet republic’s biggest brokerage. The government may sell $1.5 billion to $2 billion of 10-year, dollar-denominated debt with a yield of 7 percent to 7.5 percent after getting approval for a new International Monetary Fund loan and having its credit rating raised by Standard & Poor’s, said Olena Bilan, Dragon’s chief economist, at a press briefing in Kiev on July 30.

IDBI BANK LTD., an Indian state-owned lender, is marketing 5.5-year bonds denominated in dollars that will be priced to yield 310 basis points more than similar-maturity Treasuries, according to a banker involved with the transaction. IDBI hired Barclays Capital, BNP Paribas SA, HSBC Holdings Plc, Royal Bank of Scotland Group Plc and Standard Chartered Plc to manage the sale. Executive Director Melwyn Rego said the bank was considering a sale of bonds to raise about $500 million in an interview on July 21.

CZECH REPUBLIC plans to sell as much as $2 billion of dollar bonds to diversify from koruna and euro debt, Eduard Janota, former finance minister, said in an interview for Mlada Fronta Dnes newspaper.

POTASH CORPORATION OF SASKATCHEWAN INC., the world’s largest fertilizer company by capacity, filed a registration statement with the U.S. Securities and Exchange Commission for $2 billion of debt securities.

INDONESIA plans to name three banks to help it sell approximately $650 million of Islamic bonds in October, Dahlan Siamat, director for Islamic financing at the finance ministry, said in a telephone interview in Jakarta. The government sold its first international Islamic dollar bonds in April 2009.

CORPORACION FINANCIERA DE DESAROLLO SA Peru’s state development bank known as Cofide, plans to sell as much as $250 million of dollar-denominated bonds, according to Chief Financial Officer Carlos Linares. Linares said in an interview in Lima, that the lender is selling long-term debt as it boosts lending to local infrastructure projects. “Peru’s need for infrastructure is huge,” Linares said. “The government is trying to promote foreign investment in a long list of projects.”

SRI LANKA plans to sell dollar-denominated bonds, according to its central bank. The South Asian country’s third-ever overseas offering is likely after August, Central Bank of Sri Lanka Assistant Governor C.J.P. Siriwardena said in a telephone interview on June 30.

JORDAN plans to sell about $500 million of bonds, Finance Minister Mohammad Abu Hammour said in an interview on June 23. The sale will be denominated in U.S. dollars “as it’s a stable currency and the Jordanian dinar is pegged to it,” Abu Hammour said.

URUGUAY may sell as much as $1 billion of bonds in 2011, including $500 million of dollar-denominated debt, Carlos Steneri, director of public credit at Uruguay’s Ministry of Economy and Finance, said June 3 at a LatinFinance conference in London. The dollar-denominated bonds may have a maturity of 20 years or more, Steneri said.

MALAYSIA plans to raise about $1 billion from its first sale of conventional dollar bonds in eight years after drawing bids for five times the Islamic debt it offered, a finance ministry official said. The government may hire the same banks, including CIMB Group Holdings Bhd. and HSBC Holdings Plc, to arrange the sale by Sept. 30, said the official, who declined to be named as the discussions are private. Malaysia raised $1.25 billion from a Shariah-compliant dollar bond on May 27. Malaysia is rated A3 by Moody’s and A- by S&P.

SABIC CAPITAL, a unit of Saudi Basic Industries Corp., will sell bonds when market conditions and rates are favorable, its vice president for corporate finance Mutlaq al-Morished told al- Arabiya television in Dubai on June 16. Sabic delayed a bond sale because of unfavorable spreads, al-Morished said in a May 26 telephone interview. Sabic Capital had hired HSBC Holdings Plc, JPMorgan Chase & Co. and Royal Bank of Scotland Group Plc to manage a benchmark-sized offering.

GHANA is considering selling its second dollar bond in 2011 to tap investor demand as the start-up of oil production boosts economic growth and narrows the budget deficit, Deputy Finance Minister Fifi Kwetey said. The government is considering a “no- deal roadshow” as early as the fourth quarter to gauge international investors’ appetite, Kwetey said in a May 26 interview in Abidjan. Ghana sold its first global bond in 2007, raising $750 million to help fund the construction of roads and power plants.

ANGOLA received credit ratings from Moody’s, S&P, and Fitch Ratings that put it on par with Nigeria, Lebanon and Belarus, and paved the way for a planned sale of international bonds. The southern African nation’s creditworthiness was rated at B+ by S&P and Fitch, four levels below investment grade. Moody’s assigned an equivalent ranking of B1.

EURASIAN NATURAL RESOURCES CORP., a London-based iron ore and alumina producer with operations in China and Russia, said it delayed its first dollar bond sale. The company is “postponing meetings with investors regarding a potential bond issuance under its Euro Medium Term Note program until further notice,” Charlotte Kirkham, a spokeswoman for ENRC, said in an e-mail. The company had hired Deutsche Bank AG and Morgan Stanley to manage the sale, according to a person familiar with the transaction.

CHINA ORIENTAL GROUP CO. plans to sell senior notes to provide working capital and possibly to finance the purchase of steel mills and iron ore assets in China. Deutsche Bank AG will manage the sale with ING Groep NV, according to a statement to the Hong Kong stock exchange.

BANK FOR INVESTMENT & DEVELOPMENT OF VIETNAM received approval from the central bank to issue 7 trillion dong ($369 million) of notes and another 3 trillion dong of dollar- denominated notes in 2010, according to a statement on State Bank of Vietnam’s Web site.

BOLIVIA plans its first international bond sale in more than 70 years as early as the end of 2011, Finance Minister Luis Arce said. He didn’t disclose the size of the offering.

POWER SECTOR ASSETS AND LIABILITIES MANAGEMENT CORP. of the Philippines may sell between $750 million and $1.5 billion of dollar-denominated bonds “anytime” to help refinance maturing debt, Vice Chairman Jose Ibazeta said. The company manages the finances of state utility National Power Corp.

BRISBANE AIRPORT CORP., owner of Australia’s third-busiest airport, may sell bonds in the U.S. as it pursues new markets to help refinance debt and pay for a new runway. The company is considering a 10- or 15-year U.S. private placement and a five- to seven-year Australian dollar bond sale in late 2010 or early 2011, Chief Financial Officer Tim Rothwell said in a phone interview from Brisbane.

VIETNAM NATIONAL COAL-MINERAL INDUSTRIES GROUP, the state- owned coal producer known as Vinacomin, plans to sell as much as $500 million of bonds overseas to fund mining and energy projects, according to Deputy Chief Executive Officer Nguyen Van Hai.

FINLAND may sell five-year bonds denominated in dollars, the Finnish Treasury said in a document posted on its Web site.

MONGOLIA plans to raise $500 million selling bonds this year and the remainder of a planned $1.2 billion program will be sold according to market conditions, Batbayar Balgan, director general of the financial and economic policy department of Mongolia, said at a forum in Ulan Bator on June 16. The government scaled back its plans for global bond sales after Europe’s debt crisis drove up borrowing costs. Investment banks are advising Mongolia to issue debt with maturities of 5 to 10 years, Bayartsogt said in a Feb. 9 interview. The securities may yield 8 percent to 11 percent, he said.

To contact the reporter on this story: Katie Evans in New York at kevans28@bloomberg.net.

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